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For reverse mortgage loans: The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid. 

What Happens to a Reverse Mortgage After a Divorce

Divorce is never simple, and for older couples, it often comes with unique financial challenges. One of the biggest questions is what happens to the home, especially if there is a reverse mortgage in place.

A reverse mortgage can be affected in several ways during a divorce. If you already have one, the loan terms and ownership details may come into play when dividing assets. If you do not, a reverse mortgage could become a useful tool as part of a settlement or for financial stability afterward.

Here are answers to some of the most common questions about reverse mortgages and divorce, whether you are navigating an existing loan or considering a new one.

Does Divorce Make a Reverse Mortgage Come Due? 

Whether a divorce causes a reverse mortgage to become due depends on who is listed on the loan and what choices are made.

If both spouses are borrowers on the reverse mortgage, the loan usually stays in place as long as one borrower continues living in the home and the loan remains in good standing. In this case, the divorce itself does not cause the reverse mortgage to come due.

If only one spouse is the borrower and that spouse moves out, the reverse mortgage will generally become due. At that point, the borrowing spouse may need to sell the home or refinance in order to repay the loan.

Options for Reverse Mortgages in Place Before Divorce

When a couple takes out a reverse mortgage together during their marriage, they may face important decisions about the loan during divorce. Here are the main options:

• Sell the home. If neither spouse wants to keep the property, selling the home can pay off the reverse mortgage. Any remaining proceeds after repayment can then be divided between the two parties.
• One spouse keeps the home. If the divorce settlement allows one borrowing spouse to remain in the home, the existing reverse mortgage can stay in place. In some cases, it may make more sense for the spouse who keeps the home to refinance and take out a new reverse mortgage in their name only.
• Refinance the reverse mortgage. If there is enough equity in the home, one spouse may refinance the loan under their name alone. This can provide a clean break while allowing that spouse to continue using the home as part of their retirement plan.

What if a Borrower With a Reverse Mortgage Gets Remarried?

If you already have a reverse mortgage and later remarry, your new spouse cannot be added to the existing loan. However, refinancing may be an option.

By refinancing into a new reverse mortgage, you may be able to include your new spouse as a co-borrower, which could provide them with the same protections and advantages under the loan.

Can a Reverse Mortgage Fund a Divorce Settlement?

A reverse mortgage may sometimes play a helpful role in a divorce settlement. For example, if one spouse wants to remain in the marital home but does not have the cash to buy out the other, a new reverse mortgage may provide the needed funds.

In this case, the right to remain in the home is contingent on paying property taxes and homeowner’s insurance, maintaining the home, and complying with the loan terms

Taking a Reverse Mortgage as a Part of Divorce Proceedings

Divorce later in life often creates concerns about both financial security and housing stability. For a spouse who remains in the home, a reverse mortgage may help by removing the burden of monthly mortgage payments and improving monthly cash flow.

This strategy may also reduce housing costs in retirement and create a stronger sense of financial peace of mind after the divorce.

The Bottom Line

Divorce can feel overwhelming at any age, but when it happens later in life, the financial questions often feel even more complex. A reverse mortgage may help ease that transition, whether it is used to help one spouse remain in the home, fund a settlement, or create greater financial stability moving forward.

In all cases, the right to remain in the home with a reverse mortgage is contingent on paying property taxes and homeowner’s insurance, maintaining the home, and complying with the loan terms.

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This article is intended for general informational and educational purposes only and should not be construed as financial or tax advice. For more information about whether a reverse mortgage may be right for you, you should consult an independent financial advisor. For tax advice, please consult a tax professional.